Transcript

Chris: Hi, this is Chris Lien.

     Anita: And I'm Anita Pursley. Welcome to Industry Corner, a podcast where we share postal industry news to help you stay informed.

Chris: On today's podcast, Anita and I are going to talk about predictions for 2019. What will the year hold for us, centered around seven topics that we'll discuss. So let's get into it. Welcome to the podcast. Hi Anita.

     Anita: Good morning, Chris. Let's have some fun today.

Chris: Yeah, yeah. You know folks, it's a brand new year, January 2019 and what a great time to talk about predictions of what this year might hold. So much going on with the mailing industry. A lot of changes in Congress and of course all of this is about enhancing mail volume and seeing really what this year, 2019 a pivotal year in a lot of ways may hold for the mailing industry, for the supply chain, including our customers who are using mailing software and data. So let's get into it. And Anita, you've come up with seven topics that I thought were really interesting. So we'll just tee up those topics and just sort of talk about what the future may hold. How's that sound?

     Anita: Sounds great. Let's talk about the government shutdown first.

Chris: Yeah, exactly. I mean, as we're recording this right now, the government is shut down or at least a portion of it, about 800,000 government workers are currently on furlough. And I think there is an impact on the mailing industry, right?

     Anita: Right. I don't think we're feeling it as of yet, but we might see it down the road a little bit. The OIG, the Office of the Inspector General and the PRC, are both on furlough because those two entities receive appropriations from Congress. So the postal service isn't directly impacted, but if they need any decisions made by the PRC, well that's, you know, that's not gonna happen. So what do you think by the time this is airing next Monday, do you think we'll still be on shutdown?

Chris: Wow, that's a big question, Anita. I mean, there are people that are definitely a lot smarter than I am about the inner workings of what's going on between the administration and Congress right now, boy, where I kind of see things. I don't expect this, uh, the shutdown to end anytime soon. I think that both sides are dug in pretty deep and I'd be surprised if it's actually back to work at the time that this is published. So we'll have to see.

     Anita: Right. I think on this one we should just flip a coin. What do you think?

Chris: I think so too. My view is that it's still going to be shut down by the time that this podcast is published, unfortunately, because those individuals do need to get back to work. And to your point, the OIG and the PRC, maybe we don't feel it yet, but we certainly will eventually and both of those groups do a lot of really good work for helping to provide guidance to the industry and oversight which is necessary. So hopefully it'll end soon and we can get those people back to work.

     Anita: Right. So what do you think about postal reform in 2019, we're in the 116th congress now and it's pretty much starting over?

Chris: It is, you know, I'm an optimistic person. I always have been and I think that's important. I'd like to come into this thinking there's some optimism, but I have to tell you Anita, I just don't see it.

     Anita: I don't either.

Chris: I don't think that we'll see any legislation passed that's meaningful, which is unfortunate because it really is well overdue with some of the changes that are necessary. And it's unfortunate because there are some individuals in the house that are very knowledgeable about what is going on in the dire situation with the US postal service and the mailing industry. But I just see both sides digging in deep with their heels in their respective areas. I just don't see that coming up to something meaningful.

     Anita: I took a look at the committee assignments, you know, because of course they've changed and we have a new chairman on the house side, Elijah Cummings and he's been pretty engaged in postal and I think that it's possible he'll introduce legislation again, but when I looked at the committee, you know, of course Trey Gowdy has retired from Congress. Darrell Issa, who was also very involved in postal and was on the committee. He's also retired, so we've got some new members and they are really into investigations and I just don't see postal issues being on top of their priority list.

Chris: I don't either. And I think some of the things like the President's task force and stuff like that, I think it just overshadows a little bit of that and create some noise. And you know, missing also are two individuals that I know were real champions for rural America, right. Senator McCaskill and Senator Heitkamp.

     Anita: Exactly. Those are on the Senate committee and I don't see anybody who's going to be a champion for rural America like McCaskill and Heitkamp where and, and you know what? They were two of the sponsors of the Senate bill that came out in 115th Congress. So that's a big gap that's going to have to be filled somehow. So yeah, I just don't see it happening. And you know, all the questions often asked. What about the legislation that was pending in the last congress? Well, essentially they are null and void, so we'd have to start all over again. I'm an. They can really introduce the same legislation, but I just don't see it happening.

Chris: Yeah, I don't either. So I think we're going to say no from both of us for any postal reform legislation in 2019. Postal Governance. We've got the two governors. Right? And so now we could have up to nine of them. So I guess the question is, are we going to get any more governors for the Board of governors.

    Anita: Well, you know, talk about starting the process over again. The two candidates that were nominated by President Trump in 2018 would have to be renominated and they'd have to be resubmitted for consideration and start the process all over again. So I think for all intents and purposes, the crisis or the emergency is over now that we do have two governors, the postal service can operate and make decisions or the governors can make the decisions that are necessary. So I'm kind of pessimistic on this one too.

Chris: Oh really? Okay. I'm going to take a different view. I'm going to be optimistic on the board of governors. I think that because it is the Senate that confirms the recommendations from the President on this and since the Senate has a stronger position with Republicans with this particular Congress, I would expect to have one. Maybe two more governors, but we'll see.

     Anita: I hope you're right.

Chris: So this one and you'll say no, I'm going to say yes. I think we're going to get at least a another governor or two in 2019.

     Anita: All right, good. Let's hope so.

Chris: Now let's turn to the PRC. The Postal Regulatory Commission though, they published their 10 year rate review and there were some recommendations in that. We do have a new commissioner for the PRC, right?

     Anita: Michael Kubayanda. He was voted out of committee at the last minute and it was done by voice vote. I understand, or I learned this week that there's a little bit of a hiccup in that. It's just waiting for the President's signature, but you know, he was confirmed by the Senate and so I think that's really good news that there are actually five commissioners now on staff at the commission, but you know, I looked into his background a little bit because people think very, very highly of him and it's interesting that he once served as counsel to the House Oversight and Government Reform Committee. Did you know that? And then he was also a public policy specialist for the Office of the Inspector General, so he's going to come up to speed really quickly.

Chris: So he's going to know what's going on…And then we have a new vice chair, right?

     Anita: Right, Nancy was voted in I believe in December as the new vice chair. So of course they're in furlough right now. My prediction is we're going to see some activity on the rate review. You know, it's been since March, I mean we haven't heard word one since March when all of the comments were due and boy did they hear it loud and clear from the industry that they were not happy with the PRC proposal which could have raised rates anywhere from 27 to 40% over a five year period of time. I mean it was just. I thought it was the most incredibly disastrous proposal I've seen come out of the commission. But now that they have five commissioners, my guess is that they will maybe issue a new notice of proposed rule-making maybe with an alternate proposal and float that one. That's what I'm thinking is going to happen. I don't think we're going to see an entire year of silence out of the commission on this subject. What do you think?

Chris: I agree with you on that. I agree that not only is this new PRC which has got that five commissioners on it and some new individuals, but not new to this mailing industry. I agree. I expect to see some recommendations come out of the postal regulatory commission and I think that that's going to happen as sort of a balance to what we will not see out of the congress, so I don't expect any legislation right out of congress as we talked about before, but I do think that the PRC is going to, in the wake of that, introduce some corrective measures. The concern there, as you said before, is that out of the pool of possibilities that the PRC may select from, including potentially that the results of the task force from the President that we want to be really, really careful. So industry listeners, make sure that you stay very closely tuned to what the PRC may put forward. Listen to the podcasts and things like that and information that's going to be coming out because your voice is really critical when the PRC is looking at the response from the industry on their recommendations.

     Anita: Exactly. So the postal service issued their annual compliance report.

Chris: Yeah, I read it.

     Anita: All hundred pages, Chris?

Chris: Well, maybe not every individual page, you know, you kinda skip through.

     Anita: I was kind of thinking that I might write an article on call it the annual noncompliance reports. Right? Unfortunately I don't see any resulting from this report. We saw the same old disappointing results in service performance and flats cost coverage and there's been quite a bit of discussion about the flats cost coverage recently and the fact that the postal service is proposing lumping carrier route high density and flats together, which would essentially improve the appearance of better cost coverage but it wouldn't solve the problem. So that's a big concern.

Chris: I agree. And as I looked at that too, and you're absolutely correct, we still have a real big problem in this industry with flats. Just overall, and there were a number of years ago, maybe you could remember the individual who was the postal leader. I get her name doesn't come to mind right now, but we had like a flat summit, right?

     Anita: Rose.

Chris: Rose, yes. Thank you. And so it was like this flat summit and the industry and the postal service. We came together, there were some panels, we had some conversations, good conversations I thought, and unfortunately course shortly thereafter the flats component of mail and its contribution just completely changed and part of that was a recommendation on pricing from the PRC that I think had a huge impact on flats at the time. I'd love to see another flat summit. I'd love to see an honest and fair conversation hopefully with diplomacy, but a fair conversation on what is the future of flats and it has to be input from the industry and the postal service and maybe the PRC would be there to listen to hear what our thoughts are with it, but given the impact of catalogs in total multichannel marketing and Anita, we talked about this from the direct marketing association and how people value catalogs. It's still valued very very high. We've got to get a handle on the flats situation. This industry, I'd love to see a flat summit.

     Anita: I think that'd be a great idea. She was the champion and when she left that left a big hole and now I think there's a transparency that we want is not there.

Chris: It's not, and you know Anita, I believe you were the chair at the time. Chair of MTAC, right? We had a dedicated flats focus area. It was that important at the time. Folks, we need to make it that important again and I think a flat summit and maybe having a designated part of MTAC with it, but we've got to get a handle on the situation.

     Anita: I agree. I agree. And since I called it the noncompliance report I think I want to make sure… I know we have some postal listeners. I mean it's unfortunate because the report is really a wealth of information and there's some good news in there but everybody tends to focus on the noncompliance issues and so it's a little bit unfair, but that's what we need to work on it.

Chris: Well, yeah, exactly. Flats are the squeaky wheel and we'll have to look at that. But I agree with you. There are definitely some positive things. I love the fact that we're now doing census measurement of piece delivery. You know, we're not using the XFC anymore and just the number of other things, you're right. So for our listeners, you can download the annual compliance report. It's available for free. That is a lengthy but it great information filled with information on that. Regardless of where your position is in the supply chain, you should spend some time looking at it.

     Anita: Right, so the APWU contract, the American Postal Workers Union contract has expired and Gee, guess what? It's now in the hands of the arbitrator.

Chris: And Anita, wasn't that one of the things of the recommendation from the president's Task Force for the arbitrator? I think we put that one on the list of things that will not happen. Right? That's the non-starter.

     Anita: Or get a favorable contract. It's not going to happen. You're absolutely right. But you know, I learned from Leo Raymond's mailers' hub newsletter that, that they actually had a tentative agreement and then because of the union process, that tentative deal went to the rank and file bargaining advisory committee I think is what it's called. And they had to get their acceptance to move forward with a ratification vote. Well guess what? The committee had serious concerns about it, sent it back for further negotiation and now they reached an impasse, so it's just, I don't see anything good coming out of that.

Chris: I don't either and I think on a parallel, it's reaching that same impasse that we're seeing in Congress and we're seeing with the shut down and so forth, both sides digging in their heels lately, across the board, so hoping that cooler heads prevail. Some diplomacy comes out of this and we can at least give a contract that allows mail to continue to go forward. The importance of direct mail in this industry cannot be overstated. It's so critical in multichannel marketing and I'm hopeful that the APWU and the postal service will come up with something through an arbitrator, but I don't know. I think it's going to take awhile for that to happen, Anita.

     Anita: Okay. So last question. What do you think will be the big news, the big splash at the National Postal Forum this year?

Chris: Well, the postal service, uh, and we talked about this before, the informed addressing. It's an interesting idea. I think the postal service may try to use that as the big splash of informed addressing. I just don't see it working. I see too many problems with it. I appreciate the postal service and the idea of being innovative and thinking out of the box and trying to do things in leverage informed delivery. With that, I think it's too early and I just don't see it working effectively. I'd much rather see more of a focus on informed visibility and using the predictability of arrival of mail pieces, how to leverage that type of data and informed visibility as part of multichannel marketing rather than using informed addressing and some of these other things.

     Anita: I guess the big question here is it ready for prime time? And I have a lot of confidence in Mark McCreary who's heading this program informed addressing and we're working towards getting a work group established around it and Mark's been on the speaking circuit, getting everybody up to speed on, on the program and what are the challenges. All of the big questions are coming out of this effort, so we'll see. But I predict that it's going to be the headlines at the National Postal Forum.

Chris: I think it is too. I think they're going to do a lot of promotional around it and I understand, you know, the reasons for if you don't get the attention of what could direct mail provide for marketers, you know, try to get more of that wallet share of spend. My thought is that it's too early. There's still so many open questions around informed addressing that need to be answered first and I don't think we would have all those answers in the time for the National Postal Forum. So like I said, I'd rather see another opportunity to really talk about the value that informed visibility and mail tracking presents. You know, as I've said before, the accountability of mail tracking is absolutely firmly established. Mailing service providers leverage that. Visibility is still kind of growing in where is my mail at? But when is it going to arrive? I don't think that we've fully leveraged that component of informed visibility. And I'd love to see more of an emphasis on that rather than what this very futuristic ideas with informed address.

     Anita: I agree. Okay, so the Postal Forum is in May. That means that we have to do our look back in June and see how well we did on these predictions.

Chris: Exactly. Well, I will say that as a final note about NPF, I'm excited about the National Postal Forum. I'm really excited about some of the information that is going to be coming out leading up to that. There's postal service, their industry information that comes out about that. They've got a little newsletter for the industry that lets us know a special issue was prepared for the National Postal Forum last year. I'd love to see that again this year just to kind of highlight what are all the really cool things that are going on and of course BCC Software. We're going to be at the National Postal Forum and we're excited to listen to the market and the feedback from our customers and our partners in the supply chain. So if you're not going to National Postal Forum in Indianapolis this year, you really need to look at considering that. I think it's gonna be a great event and hope to see people there.

     Anita: Sounds great. Are we wrapping it up here?

Chris: I think we're going to wrap it up. Anita, thank you so much for the predictions and framing this up for our listeners.

     Anita: Thank you, Chris. Have a great day.

Chris: Thank you, you too. And to our listeners, really appreciate you participating by listening to the podcast today. Hopefully you're tuning into some of the other ones that we have posted up on BCCsoftware.com. Visit our webpage or give us phone call. As always, we'd like to know, how can we help? Have a great day. Everyone.